Research published this week argues EUR/USD is set to grind lower in the near term as Europe's growth story keeps falling behind America's.
The case, laid out by one recently-published analyst view, rests on three headwinds for the euro: cyclical growth momentum in Europe is fading, economic data keeps surprising to the downside, and the hangover from the energy price shock is still weighing on activity. On the rate side, the same research expects only one more European rate hike this year — meaning the interest rate gap continues to favor the dollar.
The analysis does concede that softer US consumer spending in Q1 has taken some steam out of the dollar rally. But it frames that as a speed bump, not a turning point, and not enough to rescue the euro's near-term outlook.
The one condition that could change the picture, according to this published view: European energy prices settling meaningfully lower. That scenario isn't on the table yet.